Team GTI is developing our Global Transparency Index initiative which will highlight best practice in the most transparent countries and allow different countries to benchmark themselves against others.

What’s the problem that we are helping to solve?

Most Governments around the world are encouraging their populations to become increasingly responsible for their own financial security and welfare in retirement and to take upon themselves more
of the financial risks of retirement.

For that ‘risk transfer’ approach to be justified to the community and for the transition to be successful, Governments need to know whether their pensions and investment sectors are efficient and
adequately transparent with consumers, particularly in relation to issues such as costs/charges, how/where monies are being invested and the true investment performance being achieved.

Financial services regulation is a complex, expensive and resource-hungry activity but new regulations often fail to achieve their full potential. There are many reasons for that. Regulators and
policymakers should take more advantage of what has been done in other jurisdictions but there does not yet exist a centralised source of relevant international transparency data to facilitate the
comparison, benchmarking and efficient transference of best practice that is wanted.

The Global Transparency Index is being developed precisely to solve that problem.

Several countries have taken significant measures to drive up the level of transparency in their pensions systems and the resultant transparency achieved represents an enormous societal benefit to
those countries. They have implemented good ideas that have taken a considerable amount of time, effort and money to develop and their ideas have been fine-tuned in the real world. The knowledge and
understanding of what they have done will be an invaluable insight for other countries to benefit from.

Ultimately, the Global Transparency Index will include all countries around the world. It will be produced annually and the very first iteration will be focused on the levels of
transparency in the pension systems of the UK, USA, Canada, Australia and the Netherlands, with the intention to expand the number of countries involved year by year.

By producing the Global Transparency Index, we are creating a powerful platform for sharing best practice that will inevitably lead to questions such as:

What are the most transparent countries doing that the others are not?

What steps did they take to be able to operate as they do now?

How is their transparency positively impacting their society as a whole?

What would be the ‘obvious key issues’ for the least transparent countries to focus on?

What are the obstacles preventing greater transparency from developing ‘all by itself’?

How can policymakers and regulators around the world develop a more standardised and harmonised approach?

What does the position in the ranking say about the ethics of each country?

What are the benefits of our solution?

There will be many benefits to a wide range of stakeholders. The Global Transparency Index will:

Provide critical evidence for regulators and governments to assess the transparency of their system in comparison with other systems, and to highlight areas of improvement for each system

Deliver robust evidence-based analysis to inform policy initiatives

Provide much better understanding of what it takes to drive disclosure in ‘the real world’

Shine a light on whether and how investment costs are being properly disclosed

Be a valuable resource for governments, regulators and market participants; helping them to identify and share pro-transparency best practice

Allow different countries to benchmark themselves against others

Help to satisfy the growing demand from consumer advocacy groups for ever-greater disclosure by financial institutions

Act as a catalyst in helping to restore trust and confidence in the pensions markets

Enable countries with robust and transparent systems to showcase what they have been doing to drive up transparency

Help governments to better understand whether they are achieving value for money from their extensive pensions expenditure

Help trustees who oversee pension funds to understand what they are paying their fund managers and other service providers to ensure they are investing their members’ funds in the most effective
way

Enable countries wanting to improve their transparency to easily and inexpensively evaluate what other countries have successfully done

Support the development of efficient, effective and inexpensive regulatory initiatives

Provide motivation to countries to ‘raise their game’ and improve their disclosure and transparency so they do not fall too far behind the more transparent countries - we expect the ranking will
create healthy competition by providing an additional incentive for each system to drive improvements in transparency

Provide policymakers with policy ideas and insights from around the world that they can quickly and inexpensively draw on.

What is the proposed approach?

The Global Transparency Index will be a country-by-country assessment of quantitative and qualitative research data that will form the basis of a ranking system. The countries with the most
transparent pensions systems will be at the top of the list and the least transparent countries will be at the bottom. The approach is straightforward:

We shall research various aspects of transparency on a country-by country basis, evaluating how effectively consumers and asset owners are provided with the information they need to make
decisions in a timely, easily accessible and understandable manner through regulation, laws, market practice, consumer expectations etc.

The research will be conducted annually, so we can see how the ‘world view’ develops over time

For the first year we will focus on just five countries: Australia, Canada, United Kingdom, the United States and the Netherlands, to prove the model before rolling it out elsewhere; initially to
Argentina, Australia, Brazil, Canada, Chile, Germany, Hong Kong, Japan, South Africa, New Zealand, Singapore. Thereafter we will look to further expand the coverage

The ranking will highlight best practice but also give country-by-country recommendations for improvements. Those recommendations will be fed straight into each country’s regulators and
government

A detailed report will be produced that will describe how each county measures up on a wide range of transparency criteria. The report will show where each country is strong and where it needs to
improve across key areas such as the disclosure of fees/costs, asset allocation, performance and benefits/guarantees. It will also cover some indicators of good governance, complaints
mechanisms, the allocation of members to products and the role of financial advice in the system

We will focus on transparency in the workplace pensions sector initially, and become increasingly comprehensive year-by-year by including other sectors of the financial industry

Summary and next steps

The Global Transparency Index has the potential to deliver real, practical benefits to a wide range of stakeholders around the world and contribute to much better transparency in financial
services. We believe this will lead to greater trust of the financial services sector as consumers will feel like they are being told the whole story.

We are looking to design and build the Global Transparency Index in such a way that it becomes a unique and invaluable resource for regulators and policymakers. In the planning stages of the
Global Transparency Index we are genuinely keen to take on-board ideas and preferences from all stakeholders to optimize the value of the Index.